IMF warns governments over rising food prices

The International Monetary Fund (IMF) has cautioned governments to carefully consider how they respond to rising food prices, saying the wrong measures could waste public funds without providing adequate support to those who need it most.

The IMF said millions of people, particularly low-income households, could face renewed pressure on their ability to afford food due to climate change and global conflicts.

It said changes in rainfall patterns could reduce food production in some farming areas.

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At the same time, any further escalation of the conflict in the Middle East could disrupt the supply of fertiliser and energy, making farming more expensive.

These higher costs could eventually push food prices higher for consumers.

The IMF said governments could consider measures such as subsidising food prices, distributing food directly to households or providing families with vouchers to purchase food.

However, it said governments must choose carefully because each option comes with costs and may not effectively reach the most vulnerable people.

The Fund noted that in some countries, households spend more than half of their income on food. This means a sharp rise in food prices can quickly put pressure on household budgets and increase poverty.

“For policymakers in some of the world’s most vulnerable countries, the question is not if a food shock will happen, but when,” the IMF said.

The IMF pointed to previous food shocks as an example.

It said food price increases linked to Russia’s war in Ukraine in 2022 pushed about 71 million people into poverty within three months.

The Fund further reported that prices of some fertilisers increased by almost 50% when the war in the Middle East started earlier this year.

Although fertiliser prices have since fallen, the IMF said the increase occurred during the planting season in many countries.

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Farmers who bought fertiliser at higher prices could continue to feel the impact through higher production costs, lower incomes and changes in food prices during the current harvest.

DR/MA

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